Every fool believes they alone will get out at the top. They spend the rest of their time seeking consensus on the direction of the market. Every fool knows there's strength in numbers.
The smart money is ALL OUT, the dumb money is ALL IN. At some point between now and the FOMC (Oct. 30th), stoned gamblers are going to keel over and implode. When they realize it's the only way they're going to get another bailout.
Their last bailout arrived down -20%. Their next bailout will be down at least twice that. Assuming the Trump Casino remains intact. Only record hedging saved them last year.
No leadership, no stimulus reserves, no hedging, no warning. Picture a scenario in which the global economy collapses into recession with global interest rates already at record lows. What we are witnessing is Japanification on a global basis - abject irresponsibility toward the future, in order to have a supernova consumption orgy today. An extended party at the expense of all future generations. MAGA in a nutshell, the culmination of forty years of failed Banana Republican economic policy. From free trade to trade wars.
Now, gamblers are sky-diving into pavement
Trump is the only warning anyone ever needed, to know this was all ending extraordinarily badly. This is the type of corruption that Republicans have come to love and embrace, on their road to Perdition. In Trump, they are doubling down on corruption.
"Donald Trump, who apparently surveyed the scene—the one in which his administration has literally admitted to extorting another country for political gain—and decided f--k it, let’s go for broke."
"Citizens for Responsibility and Ethics in Washington said in a statement, “This is unbelievable. Given the potential consequences the president is facing for abusing the presidency for his own gain, we would have thought he would steer clear of blatant corruption, at least temporarily; instead he has doubled down on it."
Over the coming week, markets enter the Fed's blackout period prior to the FOMC decision October 30th. Also, we are entering the peak earnings buyback blackout season. Which means this latest rally is in no man's land. Bulls see an imminent breakout to new highs. Bears, not so much. Following the established pattern below, sometime between now and the FOMC meeting, major conniption over the receding monetary heroin high will set in. The only way to get more juice is to implode spectacularly. Anything less than spectacular will be insufficient.
After all, the IMF just warned that asset prices are "elevated". Which means they have to get unelevated to get the dopium flowing.
“Equity markets appear to be overvalued in Japan and the United States,” the IMF said, in its latest Global Financial Stability report.
The IMF said investors seem to believe that the Federal Reserve and other central banks will respond quickly to sharp tightening in financial conditions, “hence implicitly providing insurance against significant declines in stock prices.”
"The belief in a central bank rescue is allowing investors to ignore tensions over international trade policy and uncertainty about the global economic outlook, according to the IMF.
A separate report released by the international agency on Tuesday portrayed the global economy as getting perilously close to recession territory."
Active managers have locked in their profits for the year. You know, same as last year:
Active gamblers are fleeing Trump Casino
Insiders cashed out at the top. Same as last time.
But what do they know?
True believers in fraud and corruption are in it to win it. With no clue that this time there is no safety net - that was the party they just enjoyed.
"I bought for the trade war, but I stayed for the recession"
